Passware Promises to Recover Crypto Passwords, But Not For the Reasons You Would Expect

Passware Inc. has announced a tool that will enable the recovery of Bitcoin wallet passwords. The software will support at least two wallets, namely the Bitcoin Core wallet and the Blockchain.com wallet (formerly Blockchain.info).

Support forums are rife with stories of coinholders who have invested in cryptocurrency but have accidentally lost their keys. That should mean that Passware’s solution is in high demand; however, it may not help the people one might expect it to.

How Encryption Works

Crypto wallets work by generating private keys that allow users to send their money. These keys exist in the form of a very long and unbreakable SHA-256 hash. If you successfully manage these keys on your own, they can provide an extremely high level of security.

Unfortunately, if you manage your keys manually (i.e. by using a paper wallet) it is very easy to lose your keys. If that happens, you will never be able to access your cryptocurrency again.

However, software wallets can store your private keys for you, and they allow you to use a traditional password system. Your private keys still exist as SHA-256 hashes, but the software wallet allows you to encrypt those keys with a secondary password.

These passwords are usually short, often human-readable, and typically chosen by the user. As such, they are relatively easy to recover, providing that you still have the wallet file on your computer.

How Passware Recovery Works

The Passware Kit attempts to crack Bitcoin wallet passwords by continuously entering different passwords. According to the press release, Passware can try “500,000 passwords per second” on a single GPU. This rate can be enhanced with the help of distributed computing.

There is a catch: the tool is intended for law enforcement and large organizations. It will be included in the 2018 edition of the Passware Kit Forensic software, which has a price tag of $995. That means that the tool will probably not be of help to individuals who have lost their keys.

Luckily, most wallets now provide recovery through redundancy: in addition to your private keys, most wallet generators also provide “seed phrases”, which are lists of words that can be used to reconstruct private keys. If you recorded your seed phrase when you created your crypto wallet, you may be able to recover it, even if you lose your password or private key.

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